The mortgage market is ultra competitive at the moment as lenders fight it out to catch the eye of potential mortgage borrowers. That competition has reached such intensity that mortgage rates have been cut to new lows in a bid to capture business.

These rates have clearly been designed to hit the headlines. In recent months we have seen a couple of lenders push below the 2% barrier on 5 year fixed rates and 2 year fixes were also nipped a little as they edge nearer to 1%.

It’s not just fixed rates either as lenders look to differentiate themselves from their competition. Some changes to tracker rates have also resulted in the lowest rates ever offered.

This is all good news for borrowers, although it’s important to note that most of the lowest rates on offer will still require a large deposit and can carry large fees, often in the region of £1,500 to £2,000. As a result, in many cases the very lowest rates will not be the best overall deal and borrowers should consider if a slightly higher rate with a lower fee could offer better value.

However, these lower benchmark rates do tend to force other lenders to consider a cut in order to stay in the hunt. It’s not all one way traffic though and there have been some increases too.

Those record breaking 5 year rates did not result in a rush of other lenders following suit and they have subsequently been withdrawn. That’s also true of many of the long term 10 year fixed rates, which have nudged up slightly in recent months.

With some of the new, lower rates undercutting the competition by as little as 0.01%, it does feel like we may now be nearing the bottom. Although economists suggest that a rise in interest rates could still be some way off, many borrowers have recognised that the mortgage deals on offer at the moment provide a fantastic opportunity to lock in at a low.

Guild Mortgage Service, Provided by London & Country Mortgages

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